Consumers Swaying Supply Chain Decisions

You want to win in the marketplace? You may have to listen more to what your customers are saying about your supply chain and how they rate it against the competition, according to a report from UL LLC that indicates growing user concerns about how businesses run operations and the effects of their decisions on society.

After poring over the Product Mindset 2012 report (registration required), I could only conclude that end customers are about to wrest control of the supply chain away from manufacturers. If your company hasn't realized this and you either run the supply chain or play a significant role in manufacturing operations, you owe it to your enterprise to bring this to management's attention immediately.

Just to be clear, it's not that the ordinary mobile phone buyer is instructing companies about their suppliers, the location of their plants, where they get their raw materials, the environmental impact of their products, or how they treat their workers. Customers aren't directly involved in such nitpicking decision making, and that isn't about to change. But they are leaving an indelible imprint on critical supply chain operations that many companies have long assumed didn't interest the public. From behind the scenes, consumers are impacting the global supply chain in ways many of us never thought possible, and they are forcing executives and operational managers to think about how their decisions will be perceived in the marketplace.

A confluence of factors is forcing customers to pay closer attention to more than just pricing. In fact, they now treat price as the baseline. They also look more critically at how goods are made and how a company's decisions impact society. Here are some of the factors that, according to UL, are impressing on customers the need to do more than watch out for themselves.

Product quality: "When asked the top two areas manufacturers should prioritize for improvement, consumers selected product quality as their first choice across all categories," the report said. "The No. 2 priority differs by category, but in each case it is rated as needing improvement to a significantly lesser degree than product quality."

Limited improvement: Consumers "express only tepid agreement that product quality is better today than it was five years ago," according to the report. Consumers were asked to rate the quality of a variety of products on a 10-point scale. The mean scores "show that consumers believe that product quality has improved in the past year," but this year's mean scores, which ranged from 6.2 to 6.9, "represent only a moderate level of agreement -- significantly below the 8.0 to 10.0 average that would constitute strong agreement."

Labor: "Consumers believe that manufacturers do not adequately care for their workers. Almost half of all consumers surveyed (48%) believe that manufacturers have not taken adequate steps to ensure that both they and their suppliers are committed to workplace safety and the ethical and fair treatment of workers. Consumers in Germany and the U.S. are significantly more pessimistic about manufacturers' treatment of workers than are Chinese consumers."

Respect for consumers: "Only 37% of consumers strongly agree that manufacturers respect the fact that they are more informed and empowered. This varies widely by country, with Chinese and Indian consumers feeling considerably more respected than do German and U.S. consumers."

Safety: "Two to three times as many consumers want manufacturers to prioritize safety improvements for food and home building materials than they do for high tech/consumer electronics or smart appliances."

Consumers are making bette decisions nowadays than before. Ease of access to information on the Internet, free flow of ideas through social network all contribute to their decision making process. Companies have to establish a strong foundation for market intelligence to capture these in real time and act swiftly.

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